9/4/18

Morning Bullet Points - 09/04/2018

GOOD MORNING—

 

MARKET HIGHLIGHTS

  • Markets trading lower at the end of the night session but have bounced back nicely with wheat seeing the most pressure after worries that Russia could impose export restrictions went away.
  • Crop progress this afternoon expected to be steady to slightly lower for both corn and soybeans.
  • Managed funds were net sellers of 57,000 contracts of corn to push the net position out to short 42,000.  They sold 13,000 beans to push the short out to 53,600 contracts, and sold 9,000 wheat to reduce the net long to 51,100 contracts.
  • China officials addressing the bean situation said they may run out of beans Feb./March time frame ahead of taking SA supplies.  China meal prices expected to remain high on tightness of bean supplies.  China bean imports from the US seen 700,000 MT vs. 27,850,000 MT last year.
  • Early yield results from the Midwest have been “lower than expected” for the most part…it is extremely early, though.
  • Argentina cut their export tax on beans and bean products, but added a 4 peso per dollar tax on all exports.
  • Brazil cancelled their recently enacted bad on glyphosate.
  • Corn technically bounced off support at the bottom of the trading range to finish the month of August.  The market is range-bound with support at 3.60 and resistance 3.85.
  • Soybeans technically bounced off the bottom of their range last week as well.  The market is range-bound with support at 8.30 and resistance at 8.70.
  • Wheat technically pulled back overnight, but remains in the long-term up- trend with support at 5.23 and resistance at 5.40.

 

WEATHER

  • Heavy rains hit much of the Midwest over the weekend to slow the start of harvest, but things dry out later in the week.
  • Temperatures run above expectations through the middle of the month, which will keep the crops headed toward maturity.

 

OUTLOOK

  • The corn market should start to get a steady flow of yield reports to give us an idea where national corn yield will end up.  Expectations are the highest they have ever been, so it will take some big numbers to see “better than expected” reports.  Regardless, the global corn balance sheet is set to tighten with the main bearish inputs for corn right now trade uncertainty and a weak bean market.  Longer term, the tightening global grain supplies should be supportive corn.
  • Soybeans did not have much of a reaction to the news overnight that China would only import 700tmt of beans this year from the US.  I think the market is taking the stance that that would be impossible.  We still need to get something figured out with China, which seems possible, as both parties would benefit from an agreement.  Having said that, bean supplies are going to be large even if we do get a trade deal done, so corn will probably need to lead any move to the upside.
  • Wheat continues to see extreme volatility.  Everyone is keeping an eye on Russia for hints at any change in plans for their exports.  With so much uncertainty, I think you have to rely on charts for trading decisions.  The base that was built last winter is still in place, and the trend is higher.  Large moves are to be expected, but I don’t think the market is signaling the we need to be bearish wheat just yet.

 

Fun Fact of the Day:  Only one president, Martin Van Buren (in office 1837–1841), did not speak English as his first language. Growing up in the Dutch community of Kinderhook, New York, he spoke Dutch as a child and learned English as a second language while attending the local schoolhouse.

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